“My biggest concern at the moment is: how could I choose optimal stocks for my portfolio…”

Feedback in:

Dear Michael,

Thank you for your email.

I’m impressed. When I subscribed to your newsletter, I wasn’t expecting such a question. I understand you really want to learn, what’s important for the people who read your newsletter; me included.
That’s interesting, thank you! First of all, I’m a software engineer and since about a year, also a trader. I’m trading stocks on the Polish stock market, with help of my personal software.
My biggest concern at the moment is: how could I choose optimal stocks for my portfolio? I already tried a few approaches, including the one that [name] has described in his “[name]”: based on Momentum score and volatility. I know that was mostly educational, and not to use in real scenarios, but still I was expecting better results. These are, at least according to my backtests on [name], not very impressive. What would you recommend for stocks selection? What approaches have you tried so far, and what are you using now?

Looking forward to seeing your newsletter!

A place to start to think about markets. Big picture you need to address more than just a portfolio:

• Exact rules for selecting your tracking portfolio.
• Exact rules for entering your trades at the right time.
• Exact rules for exiting your trades with a loss.
• Exact rules for exiting your trades with a profit.
• Exact rules for how much money to bet on each trade.

Ep. 834: Karim Lakhani and Marco Iansiti Interview with Michael Covel on Trend Following Radio

Karim Lakhani and Marco Iansiti
Karim Lakhani and Marco Iansiti

Subscribe to Trend Following Radio on iTunes

“AI is the ‘runtime’ that is going to shape all of what we do.” –Satya Nadella, CEO, Microsoft

Marco Iansiti and Karim R. Lakhani show how reinventing the firm around data, analytics, and AI removes traditional constraints on scale, scope, and learning that have restricted business growth for hundreds of years. From Airbnb to Ant Financial, Microsoft to Amazon, research shows how AI-driven processes are vastly more scalable than traditional processes, allow massive scope increase, enabling companies to straddle industry boundaries, and create powerful opportunities for learning–to drive ever more accurate, complex, and sophisticated predictions.

When traditional operating constraints are removed, strategy becomes a whole new game, one whose rules and likely outcomes this book will make clear. Iansiti and Lakhani:

• Present a framework for rethinking business and operating models.

• Explain how “collisions” between AI-driven/digital and traditional/analog firms are reshaping competition, altering the structure of our economy, and forcing traditional companies to rearchitect their operating models.

• Explain the opportunities and risks created by digital firms.

• Describe the new challenges and responsibilities for the leaders of both digital and traditional firms.

This is an essential guide for rethinking how your firm competes and operates in the era of AI.

Marco Iansiti, the David Sarnoff Professor of Business Administration at Harvard Business School, also heads the school’s Technology and Operations Management Unit and the Digital Initiative. Iansiti is an expert on digital innovation, with a special focus on strategy and business and operating model transformation. He advises Global 1000 companies on digital strategy and transformation and has conducted research on a variety of organizations, including Microsoft, Facebook, IBM, Amazon, Alibaba, and Google, among many others.

Karim R. Lakhani is the Charles E. Wilson Professor of Business Administration and the Dorothy and Michael Hintze Fellow at Harvard Business School. He is the founder and codirector of the Laboratory for Innovation Science at Harvard, the principal investigator of the NASA Tournament Laboratory at the Harvard Institute for Quantitative Social Science, and the faculty cofounder of the Digital Initiative at HBS. He is also Chair of the Harvard Business Analytics Program. He specializes in technology management and innovation.

In this episode of Trend Following Radio:

  • Competing in the Age of AI: Strategy and Leadership When Algorithms and Networks Run the World

Mentions & Resources:

“I have been loosely following Jesse Livermore’s buy high and sell your losers…”

Feedback in:

Hi Michael-

I read the book! Have been applying the principles and it seems to work at least for the last two months. I have been loosely following Jesse Livermore’s buy high and sell your losers. Thanks to the Turtle Trading concepts I now have a more disciplined approach to manage my investments or trades. Having success with short selling too, however it is testing my resolve to stay the course when the position begins to turn positive.

All the best,
Robert

Keep going! More resources.

“Thank you again for your dedication and hard work bringing your craft to people…”

Feedback in:

Hi Michael,

Thank you for all of your amazing podcasts and knowledge. I have been working my way through several episodes the past few weeks and I find the interviews absolutely phenomenal! There are actually two big challenges I have with my trading and I know it’s the norm. First, I have very little time to trade, as I have a full time job with an hour commute each way. This has me checking the market and placing trades pre-market at 4:30am (California time) before I leave for work each day. Then I sneak a few peaks throughout the day to see how my trades are doing. This leads me to my second issue, not being able to let my trades work. When I check in on them, I feel like I’m up a hundred dollars or down some and I need to get out while I’m up because I don’t know when I’ll be able to check in again and I might be down. Then, naturally the stock goes exactly how I thought it would almost immediately and I miss out. I know you can help me with these issues. I just ordered your latest book and am looking forward to learning and practicing what you teach. Thank you again for your dedication and hard work bringing your craft to people like me who are wanting more knowledge.

Respectfully,

Nick M.

More knowledge? Go here.

” If you are ever in Australia let me know it would be fantastic to chat with you….”

Feedback in:

G’day Mike,

Just been relaxing and listening to your last Larry Hite interview and am looking forward to reading his book which is is winging it way to me at this very moment.

Its been a fantastic year of learning, listening to your podcasts and reading books and getting my trading under systematic control. It is kind of like a cloud that has lifted after many years of trading stocks. You have a great interviewing style which is a product of the passion you have for the subject. That you have stuck with it over the years in the face of the naysayers is testament to the belief that it works and anyone can do it if they have the mental fortitude.

I bought Amibroker, learned to program it, test the systems and most of all, have the confidence to follow the signals. I wish it had been something I’d done much earlier in life but that is just the way things go, better to start sometime than not at all. I’m building up a track record and will have a years worth of data at the end of January.

I have told people how I trade stocks and get the same feedback that you have encountered, what about fundamentals, what qualifies me to give advice. There is an old saying that my dad passed onto me years ago which you are no doubt familiar with “You can lead a horse to water but you can’t make it drink”.

There are a couple of other guys who are trend traders in the local ATAA (Adelaide tech analysis) who believe that you have to step back and trade the longer slower trends while all the rest in the group are going the opposite direction of looking at 5minute bars and tick charts. I’m about to launch with a weekly bar system in the new year.

If you are ever in Australia let me know it would be fantastic to chat with you. Are you still in Asia?

Have a great New Year and continue the great work.

Regards,

Neil D.

My location is top secret!

More of a trend following deep dive? Here and here and here.